Best Rehab Financing Strategy
Acquired my 1st Investment Prop. It needs some work & I'm trying to choose the best financing strategy. Hard money? Small Business loan? It is held by my LLC so I've been told that a HELOC is not an option as it's a personal mortgage product.
Are there other financing options that I’m overlooking? Can you share any suggestions, opinions or experiences?
Thanks in advance
#4 Private Lending & Conventional Mortgage Advice Contributor
- Banker
- Nationwide
- 985
- Votes |
- 1,811
- Posts
#4 Private Lending & Conventional Mortgage Advice Contributor
- Banker
- Nationwide
Davina,
Regardless of the property being held in an LLC you can still refinance the property if there is equity to pull out to start the renovations. DSCR will offer a 75% LTV cash out refinance while being in the LLC and allow you to close in the LLC. Other option would be to take out either a personal loan, LOC line of credit and use the funds to renovate and then refinance. ten use the new ARV to recoup the intial capital and pay off or down the LOC or P-loan.
If you own other properties Primary or secondary just do a cash out refinance on one of them to get the cash needed. Rates may be a little higher but you can refinacne in 12-24 months and do a rate reduction loan.
Thanks for the walk through Jason. Definitely a few extra options here. I'm unfamiliar with DSCR but I'll be doing my research.
Jason listed some really good options. As an aside, if you plan to hold and refinance after the rehab do not use credit cards as a high utilization will drop your credit and make the refi difficult and expensive.
DSCR for the properties in the LLC.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,506
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Hard money for me has been the easiest to get.
DSCR......
partner with someone with cash. Im big on partnerships if you cant tell but partner with them and you can accomplish more, buy larger deals or packages.
Davina,
There are a ton of options out there to finance real estate and more ways seem to pop up everyday. I am constantly getting bombarded with ads from lenders about how their new loan program is the best since they offer XYZ terms that are different than everyone else. Be careful about what they advertise since you may or may not qualify for that particular loan package once you submit your financial information. Make sure you have been fully qualified and understand the loan being offered before submitting an offer on a property. I have seen investors have to back out of a contract and lose earnest money since they did not fully understand the loan they intended to use. You can easily avoid these problems by doing as much research as possible. Make sure you shop around for the best lending strategy that fits your personal needs!